RBI Monetary policy highlights: Inflation outlook uncertain, says RBI guv

RBI monetary policy highlights: The Reserve Bank of India's (RBI's) six-member monetary policy committee, headed by Governor Shaktikanta Das, announced the outcome of its bi-monthly monetary policy review today. Given the rise in the spread of coronavirus and the imposition of fresh restrictions to contain the virus spread, the RBI decided to maintain status quo on the benchmark repo rate — the rate at which the central bank lends short-term funds to banks — at 4 per cent. It also kept the accommodative monetary stance unchanged today to nurture a fragile economic recovery.  

The policy announcement, the first for the fiscal, will come days after the government maintained the RBI's target to ensure inflation to be within 2-6 per cent band for five more years.

Policy repo rate or the short-term lending rate is currently at 4%, and reverse repo rate 3.35%

Stay tuned for RBI Monetary policy LIVE updates

LIVE UPDATES

Deputy Governor Patra comments on RBI’s message to the markets on G-SAP

Irrespective of what the RBI wants, we will give you Rs 1 trillion; that;s our message to the markets
By influencing G-Sec rates, we can ensure congenial financing conditions
In the OMO setting, the market is usually guessing, as opposed to G-SAP where there is an explicit commitment

RBI Monetary policy LIVE: Inflation outlook uncertain, says RBI Guv Das

Have mentioned in our statement that 4% inflation target is well entrenched
 
Tolerance band allows room to the RBI to act in extraordinary circumstances
 

At the current juncture, we have said that growth is of paramount importance: RBI Governor

At the current juncture, we have said that growth is of paramount importance, while keeping in mind inflation targetting: Shaktikanta Das

RBI Monetary policy LIVE: Inflation outlook uncertain, says RBI Guv Das

RBI Monetary policy LIVE: Inflation outlook uncertain, says RBI Guv Das

RBI comitting its balance sheet to the conduct of monetary policy for the first time: RBI Dy Guv Michael Patra

Giving an amount allows participants to plan their engagement with the borrowing programme.
It is a challenging instrument; but it is a risk RBI has taken given its commitment to liquidity management

G-SAP is different from usual open market operations. We have given it a distinct character: Shaktikanta Das

"For the first time we are giving a quantum for bond purchase in the secondary market.
 
Within the quarter, we will be announcing secondary market auctions from time to time"

RBI Monetary Policy LIVE: RBI Dy Guv Michael Patra: GSAP will run alongside our normal liquidity operations

RBI Monetary Policy LIVE: RBI Dy Guv Michael Patra: GSAP will run alongside our normal liquidity operations

RBI Governor Shaktikanta Das speaks to the media on the MPC decision and new measures announced


Our signals, actions and communication ust be read together, says Guv on RBI Policy

Our signals, actions and communication  ust be read together, says Guv on RBI Policy

Addressing overall liquidity situation in market to ensure orderly evolution of yield curve, says RBI Guv

Addressing overall liquidity situation in market to ensure orderly evolution of yield curve, says RBI Guv

RBI Guv: G-Sec acqn programme is in addition to normal instruments in our toolkit for liquidity management

The Reserve Bank of India (RBI) today announced a secondary market government security acquisition programme (GSAP 1.0) wherein the central bank will purchase government bonds worth Rs1 trillion from the secondary market in the first quarter of this fiscal. The first purchase of Rs25,000 crore will take place on 15 April.
 
“While laying out the liquidity management strategy for 2021-22, let me unequivocally state that the Reserve Bank’s endeavour is to ensure orderly evolution of the yield curve, governed by fundamentals as distinct from any specific level thereof. Our objective is to eschew volatility in the G-sec market in view of its central role in the pricing of other financial market instruments across the term structure and issuers, both in the public and private sectors," RBI governor Das said on Wednesday while announcing the monetary policy statement first by-monthly monetary policy statement of fiscal 2021-22.

Sandeep Bagla, CEO, TRUST Mutual Fund on RBI Policy

"Interest rates are likely to remain range bound going forward as RBI is committed to ensure easy liquidity and low repo rates. The increase in Government borrowings are likely to be partially offset by RBI OMOs and secondary market purchases of Government securities. Inclusion of government securities global bond indices will add to the demand. Corporate bond spreads are likely to remain at moderate levels on back of restrained supply and continued demand from institutional investors. Unless inflation expectations start increasing in the future, fixed income investors will do well to remain invested in Indian bonds."

RBI Monetary Policy LIVE: Shaktikanta Das addresses media

RBI Monetary Policy LIVE: Shaktikanta Das addresses media

RBI MPC LIVE: Governor Shaktikanta Das to address media at 12 pm

Governor Shaktikanta Das to address media at 12 pm

RBI commits to OMO calendar, leaves key policy rates and stance unchanged

The Reserve Bank of India (RBI) on Wednesday fulfilled a long-standing demand of bond market participants of having an open market operations (OMO) calendar of sorts, through which the central bank would commit its periodic support to the market.
 
As expected, the six-member monetary policy committee kept the policy repo rate and stance unchanged at 4 per cent, and ‘accommodative’, “for as long as necessary”, respectively.
 
Despite the surge in Covid-19 infections, the growth target also remained unchanged at 10.5 per cent for the fiscal, but inflation was tweaked upwards slightly. The CPI inflation is expected to be 5 per cent for Q4FY21, 5.2 per cent in Q1FY22, 5.2 per cent in Q2FY22, 4.4 per cent in Q3FY22 and 5.1 per cent in Q4FY22 with risks broadly balanced. Read on...

G-SAP, TLTRO extension: Key takeaways from RBI's April monetary policy

Given the rise in the spread of the coronavirus (Covid-19) infection and imposition of fresh localised lockdowns, the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) on Wednesday decided to leave the key repo-rate unchanged at 4 per cent. It also maintained the policy stance as ‘accommodative’ to keep the liquidity taps running in the economy.
 
“The recent surge in infections, however, imparts greater uncertainty to the outlook,” RBI governor Shaktikanta Das said today, setting the stage for the financial year of 2021-22 (FY22). April policy was the first bi-monthly MPC meeting of the new fiscal year. “Localised and regional lockdowns could dampen the recent improvement in demand conditions and delay the return of normalcy,” he said. Read on...

RBI has been pragmatic on growth; ring-fenced the liquidity issue

The Monetary Policy Committee (MPC) decision on rates was quite expected and hence the status quo was not a surprise for the market. The same holds for the accommodative stance, which means that growth will remain the main objective, as the MPC has stated that this stance will hold until growth prospects stabilise.
 
The focus was to be more on the language of the RBI on growth and inflation. Here, the RBI has been pragmatic on growth with a forecast of 10.5 per cent for fiscal 2021-22 (FY22), which is quite timely. Read on...

Expert Views: RBI holds rates at record lows amid concerns over rising Covid-19 cases

COMMENTARY
 
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
 
"As expected by us and the market, the RBI kept the policy rate (the repo rate) unchanged at 4% while keeping the stance as accommodative. This too is in line with our expectation despite the surging inflation since the massive second wave of infection has induced ample uncertainty about the recovery momentum."
 
"While nobody is expecting a reversal of the momentum, there is already tell-tale evidence of stalling momentum. As we have been reiterating, various high-frequency data for February does suggest loss of momentum and this has seemingly extending to March."
 
"More importantly, with domestic consumption being much more muted compared with the levels of activity, worries do persist even though RBI retained its FY21-22 real GDP growth expectation at 10.5%. This, we believe, will eventually be revised down by 2H21."
 
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI
 
"Today's policy is in line with the expectations. The RBI's assurance on the secondary market gilt purchase programme in FY22 will help in the management of the yield curve. However, the MPC's projections of the GDP and CPI trajectories do not reflect the uncertainties created by the second wave of COVID-19 infections and the use of blunt measures like lockdowns in many states."
 

CPI Inflation likely to be subject to both upside and downside pressures: RBI Governor Shaktikanta Das

RBI Governor Shaktikanta Das said that Consumer Price Index (CPI) inflation trajectory is likely to be subject to both upside and downside pressures. Food inflation will depend on progress of the south-west monsoon and taxes on petroleum products, the RBI governor said.

RBI to ensure orderly conduct of government borrowing; preserve financial stability: RBI Governor

RBI to ensure orderly conduct of government borrowing; preserve financial stability: RBI Governor
 

Under ECB framework, limit for parking of unused ECB proceeds in India extended

Under ECB framework, limit for parking of unused ECB proceeds in India extended, says Shaktikanta Das

RBI MPC LIVE: Cash withdrawal by full-KYC PPIs issued by non-bank users allowed

RBI MPC LIVE: Cash withdrawal by full-KYC PPIs issued by non-bank users allowed

RBI MPC LIVE: Aggregate ways and means advance limits for states increased

RBI will enhance ways and means advance (WMA) limit to Rs 47,010 crore, up to 46 per cent from current limit of Rs 32,255 crore.

RBI Monetary Policy LIVE: Interoperability among full-KYC PPIs made mandatory, says Shaktikanta Das

Current outstanding limit on these prepaid instruments doubled to Rs 2 lakh
 

RBI Monetary Policy LIVE: Centralised payment systems like NEFT and RGTS to be extended beyond banks

Centralised payment systems like NEFT and RGTS to be extended beyond banks to prepaid payments, card networks, white-label ATM companies, etc
 

RBI MPC LIVE: Financial inclusion index based on various parameters to be published in July every year

RBI MPC LIVE: Financial inclusion index based on various parameters to be published in July every year

RBI MPC LIVE: Loan limit under priority sector lending to agri sector increased from Rs 50 lakh to Rs 60 lakh

RBI MPC LIVE: Loan limit under priority sector lending to agri sector increased from Rs 50 lakh to Rs 60 lakh

Bank lending to registered NBFCs other than MFIs under priority lending extended

Bank lending to registered NBFCs other than MFIs under priority lending extended
 

RBI Monetary Policy LIVE: A body to be set up to review the functioning of ARCs and recommend measures

RBI Monetary Policy LIVE: A body to be set up to review the functioning of ARCs and recommend measures.

RBI Monetary Policy LIVE: Maximum end of the day balance limit being doubled to Rs 2 lakh

RBI Monetary Policy LIVE: Maximum end of the day balance limit being doubled to Rs 2 lakh

Liquidity support of Rs 50,000 crore to be provided to Nabard, NHB and Sidbi: RBI Guv

Liquidity support of Rs 50,000 crore to be provided to Nabard, NHB and Sidbi: RBI Guv Shaktikanta Das

RBI Monetary Policy LIVE: TLTRO on-tap scheme extended by 6 months to Sep 30, 2021

What is TLTRO or LTRO?
 
LTRO lets banks borrow one to three-year funds from the central bank at the repo rate, by providing government securities with similar or higher tenure as collateral.
 
Targeted Long-Term Repo Operations (TLTRO), banks can invest in specific sectors through debt instruments (corporate bonds, commercial papers, and non-convertible debentures (NCDs)) to push the credit flow in the economy.
 
It is called 'Targeted' LTRO as in this case, the central bank wants banks opting for funds under this option to be specifically invested in investment-grade corporate debt.
 
This helps banks get funds for a longer duration as compared to the short-term (up to 28 days) liquidity provided by the RBI through other tools such as liquidity adjustment facility (LAF) and marginal standing facility (MSF).

RBI MPC LIVE: Secondary-market Rs 1-trillion G-Sec acquisition programme 1.0 announced

RBI MPC LIVE: RBI governorDas announces secondary-market Rs 1-trillion G-Sec acquisition programme 1.0 announced

In the next five years, we to aim at building and consolidating gains of flexible inflation-targeting regime

Monetary policy in the next five years to aim at building and consolidating gains of flexible inflation-targeting regime: RBI Governor Shaktikanta Das
 

Projection for CPI-based inflation has been revised to 5.2% in Q1 and Q2 of FY22, 5.3% in Q3 and 5.1% in Q4

The projection for CPI-based inflation has been revised to 5.2% in Q1 and Q2 of FY22, 5.3% in Q3 and 5.1% in Q4

RBI MPC LIVE: The projection for real GDP growth in Q1FY22 at 22.6%, Q2 at 8.3%, Q3 at 5.4%, Q4 at 6.2%

The projection for real GDP growth in Q1FY22 at 22.6%, Q2 at 8.3%, Q3 at 5.4%, Q4 at 6.2%, says RBI guv Shaktikanta Das.

Inflation projection: 5% in Q4 of FY 2021; 5.2% in first half of FY2022; down to 4.4% in Q3 and 5.1% in Q4

Inflation projection: 5% in Q4 of FY 2021; 5.2% in first half of FY2022; down to 4.4% in Q3 and 5.1% in Q4, says RBI governor Shaktikanta Das

RBI MPC LIVE: Projection of real GDP growth for 2021-22 retained at 10.5%

Projection of real GDP growth for 2021-22 retained at 10.5%, says Shaktikanta Das.

Rural demand remains resilient, urban demand gaining traction and should pick up, says RBI guv Shaktikanta Das

Rural demand remains resilient, urban demand gaining traction and should pick up further with a pick-up in vaccination drive

Firms engaged in manufacturing and services sector remain optimistic about economic activity and growth

Firms engaged in manufacturing and services sector polled by the RBI remain optimistic about economic activity and growth, says RBI governor Shaktikanta Das

RBI Monetary Policy LIVE: Global economy is showing some recovery but the path remains uncertain

Global economy is showing some recovery but the path remains uncertain, says RBI governor Shaktikanta Das.

Stance of MPC will remain accommodative till the prospects of economic recovery are not sustained

The stance of the monetary policy will remain accommodative till the prospects of economic recovery are not sustained

RBI Governor Shaktikanta Das: RBI's MPC has unanimously decided to keep repo rate unchanged at 4%

RBI's MPC has maintained its accommodative policy stance

Reverse repo rate unchanged at 3.35%

RBI Monetary Policy LIVE: Marginal standing facility and bank rate kept unchanged at 4.25%

RBI Monetary Policy LIVE: Marginal standing facility and bank rate kept unchanged at 4.25%

RBI keeps repo rate, reverse repo rate unchanged at 4% and 3.35%

RBI keeps repo rate, reverse repo rate unchanged at 4% and 3.35%
 

Economists in a Bloomberg survey saw CPI at 5% in April-June period before easing to 4.7% in the next 3 months

Economists in a Bloomberg survey saw CPI at 5% in April-June period before easing to 4.7% in the next 3 months

RBI boosts back-up, cuts staff attendance as Covid-19 infections surge

The second wave of the Covid-19 pandemic in Mumbai has prompted the central bank to beef up the back-up centres to carry out essential services such as payments systems, while cutting down on staff attendance at its head office.
 
The central bank has three back-up centres – two in adjoining Navi Mumbai and one in Nagpur, nearly 850 km away from Mumbai. Last year when the pandemic broke out, one of the centres was activated to ensure the financial system runs smoothly in the wake of a once in a century event. Read on...

Search panel to hold interviews for RBI Deputy Governor role on Apr 15

A search panel headed by the Cabinet Secretary is scheduled to interview eligible candidates on April 15 for the post of RBI deputy governor, according to sources.
 
The post fell vacant after senior-most deputy governor BP Kanungo demitted office after completion of his one-year extension on April 2.
 
Kanungo was in charge of currency management, payment and settlement, foreign exchange, external investments, internal debt management, among others. Read on...

Banks turn RBI's hot-money decision into lucrative trade strategy

The Reserve Bank of India’s attempt to flush out excess dollars from the local market has offered a unique arbitrage opportunity for some banks.
 
Lenders are using a regulatory loophole to make a sizable profit, according to people with knowledge of the matter. A large bank could easily rack up exposures of more than $1 billion using this strategy, multiple traders said, asking not to be identified as the deals aren’t public. Top beneficiaries from these trades are foreign banks, which have large and easy access to dollar stockpiles. Read on...

Bond market upbeat with RBI on back foot as Covid-19 infections surge

With partial lockdowns being announced in parts of the country, notably in Mumbai and Delhi, the bond market feels the Reserve Bank of India (RBI) will be in no mood to tinker with its rates or accommodative stance for some time to come.
 
Depending on the course of the fresh surge in Covid-19 cases — daily infections have touched 100,000 — investors might expect a rate cut. But that is unlikely in the policy to be announced by the monetary policy committee on Wednesday. Read on...

Gross NPAs of banks may rise to 9.6-9.7% by March-end: Report

As the impact of various relief measures, including a moratorium on loan repayment and asset classification standstill wanes off, gross non-performing assets of banks may likely rise to 9.6-9.7 per cent by March 31, 2021, says a report. According to Icra Ratings, GNPAs (gross non-performing assets) of banks may worsen further to 9.9-10.2 per cent by March 31, 2022.

RBI Monetary Policy LIVE: Currently, the repo rate is 4 per cent and reverse repo rate is 3.35 per cent

RBI Monetary Policy LIVE: Currently, the repo rate is 4 per cent and reverse repo rate is 3.35 per cent

Shaktikanta Das will make the monetary policy announcement at 10 am

A post-policy press conference will be held at 12 pm.

RBI Governor Shaktikanta Das's Monetary Policy statement at 10:00 am

Sign of normalisation of economic activity in India: IMF chief economist

There is evidence of normalisation of economic activities in India, chief economist of the International Monetary Fund has said.
 
On Tuesday, the IMF predicted a projected an impressive 12.5 per cent growth rate for India in 2021, stronger than that of China, the only major economy to have a positive growth rate last year during the COVID-19 pandemic.
 
"The evidence we were getting in the last couple of months in terms of the normalisation of economic activity," IMF's chief economist Gita Gopinath said ahead of the annual spring meeting of the IMF and the World Bank here. Read on...

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